The latest HMRC Agent Update highlights updated content regarding two aspects of corrections in payroll. We explain below the action that employers should take to ensure that employees have paid the right amounts.

Agent Update (AU) issue 113 published on 18 October carries two articles marked ‘updated content’ which are articles from previous editions amended following intervention by the Tax Faculty.  

Student loan repayments 

Employers can collect under deductions, or must refund to employees over-deducted student loan repayments if a mistake has been made in the current year, or in a past year before the final RTI return (final FPS or EPS) for the year has been submitted. Collection of under deductions in a pay period cannot exceed the amount due to be collected in that period. Where an over or under deduction has been made in a previous year and the final RTI return has been submitted, employers need to contact HMRC’s Employer Helpline. HMRC will make the necessary corrections and refund if appropriate. 

Further information 

National insurance contributions (NIC) 

When correcting an NIC error in payroll for the current or previous tax year and the employer made the error in ‘good faith’, the employer can recover from the employee (if still employed) the employee primary Class 1 NIC under-collected, subject to the amount recovered not exceeding double what the employee would normally have paid.  

Further information  

ICAEW’s Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

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